Mortgage Glossary
Qualifying Ratios
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
Qualifying ratios are the two debt-to-income calculations, front-end and back-end, that lenders use to decide how much mortgage you can afford.
What Qualifying Ratios means
The front-end ratio compares your proposed housing payment to gross monthly income; the back-end ratio compares all monthly debt, including the new mortgage, to that income. Each program sets limits, though automated underwriting and compensating factors can stretch them.
Florida example
A Florida couple earning $8,000 a month with a $2,000 target payment had a 25% front-end ratio. Adding $700 in car and card payments put the back-end at about 34%, comfortably inside conventional guidelines.
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